Moodys Module 2 and 8 RTCBOM

What are the components of credit risk?

• PD

• LGD

• EAD

• All of the above

Key drivers of PD?

• Mgt risk,Industry, business, financial,macro economic

• Mgt risk,Industry, business, financial,

• Facility,mgt risk,industry risk,business risk,financial risk

• Mgt risk,group structure,industry, business & financial risk

Elements of portfolio credit risk?

A.Individual exposure

B. Asset Correlation

C. Credit Migration

D. Concentration

• A , B, C

• A, B, D

• B, C , D

• A,D, C

Expert systems are best used in small businesses and credit cards

• True

• False

One weakness of Statistical default models are they use accounting data which can be subject to manipulation?

• True

• False

Which of the following statements about liquidity is correct?

• Sufficient net profits to cover interest and principal

• Sufficient net operating profits to cover interest and principal

• Sufficient net cash after operations to cover interest and principal

• Sufficient earnings to cover EBIT,TAx, Dep & amortization

Solvency means?

• Sufficient cash from liquidation of all company assets to repay P+I

• Sufficient cash from liquidation of all current assets to repay P+I

• Sufficient cash from liquidation of all current assets to repay current liabilities.

• Sufficient cash from liquidation of all assets to repay current liabilities.

Which among the following is NOT characteristic of an effective underwriting framework?

• Right people make right decisions

• Decisions are made on the basis of right informaiton

• The right decisions are made

• Flexibility in risk acceptance to accomodate more and more

Which of the following is not a benchmark for bank's lending business?

• Prudential limits by RBI

• Single/group limit

• Sales turnover limit

• Activity clearances

What is credit structuring?

• Aligning repayment schedule with cash flows

• Liquidity of the borrower

• Vetting projections of future performance

• Evaluation of mgt risk